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How to compare college aid letters

Key Points
  • Before deciding on a college for next year, families should look at what kind of aid is being offered and the conditions that apply.
  • What may look like the largest offer might not be the best.
  • Plus, schools will often negotiate; they just don't advertise it.
Students enter the Admissions Building on the campus of Harvard University.
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It's as important as the college acceptance letter but rarely as black and white.

A school's financial aid offer typically maps out your expected family contribution and what scholarships or need-based aid you qualify for, not only in the first year but throughout your college career.

Financially, a lot is at stake. With prices steadily rising, cost is a major concern when selecting a school for this year's high school seniors.

At public, four-year institutions, tuition plus room and board for the current school year hit $21,370, according to the College Board. At four-year private universities, the cost was more than double that: $48,510, on average.

However, about two-thirds of all full-time students receive aid, which can bring a school's sticker price significantly down.

Your net price is a college's tuition and fees minus grants, scholarships and education tax benefits, according to the College Board.

The first thing families should do is take the time to understand the financial aid award letter — particularly the difference between scholarships and loans, said Ashley Boucher, a spokeswoman for Sallie Mae, which provides loans to students.

"It will show free money, like scholarships and grants, and borrowed money, like loans," she said. "Not every offer is created equally.

"If you compare a package that has a higher percentage of loans, it might make sense to take a smaller package that has more money that doesn't have to be repaid," she added.

The biggest award package might not be the best one.
Ashley Boucher
spokeswoman for Sallie Mae

For that reason, "the biggest award package might not be the best one."

To get a better sense of your total cost, also consider books, supplies and transportation costs, advised Kalman Chany, a financial aid consultant and author of the Princeton Review's "Paying for College Without Going Broke." "Add at least another $3,000 to $3,500 for the year to cover extra expenses."

Further, he said, note the terms of the aid being offered. Is it renewable for all four years, and what is the minimum grade point average you have to maintain? A school that seems more generous initially might offer less funding down the road, he said. "Factor in that next year your costs could go up."

Why college is so expensive in America

If you still have questions about the financial award letter, "don't panic," said Davin Sweeney, a director of college counseling at Collegewise in New York. Instead, call the financial aid office.

"That's their job: to help families understand how this stuff works," Sweeney said.

"What's great about these awards letters is that this is a starting point; it's not a final decree," said Sallie Mae's Boucher. "You can always appeal."

Schools are often receptive to appeals for more aid; they just don't advertise it. The best way to make such a request is to write a letter to the school's financial aid office, she advised.

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If your circumstances have changed — whether that's as a result of a job loss or an unexpected health expense, or even because of the government shutdown earlier this year — provide documentation, added Chany.

"The college understands how important the cost of attendance i,s and they want to make it work," Sweeney said.

Still, once you have your final award offer, be careful to put it in context, Boucher said. "There are a lot of different reasons to choose a school; cost is one of them, but it's not the only one."

For more on how to assess aid offers ahead of "decision day," see the infographic below.

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